IP: Adding to the popularity of ITC proceedings

The International Trade Commission (ITC) has become an increasingly popular forum for resolution of patent disputes. Matters move relatively quickly from investigation to decision at the ITC. As a result, generally accepted wisdom holds that speed is the ITC’s primary benefit when it comes to patent infringement matters. In fact, the ITC has a statutory mandate to resolve investigations “at the earliest practicable time” (usually, within 15 months).

But the ITC offers patent holders more benefits than just a fast result. Through exclusion and cease-and-desist orders, the ITC offers patent holders the kind of injunctive relief that seems hard to get from district courts since the Supreme Court’s decision in eBay Inc. v. MercExchange LLC. And—as the recent ITC decision Certain Blu-Ray Disc Playersillustrates—ITC proceedings typically offer patent holders a way to continue to pursue their rights during a pending PTO reexamination. Unlike what seems to be the continuing trend in district court actions, Certain Blu-Ray Disc Playersseems to show that ITC investigations are seldom stayed pending PTO reexamination.

Stays in the ITC are typically determined by review of five factors:

1. The state of discovery and the hearing date2. Whether a stay will simplify the issues and the hearing of the case3. The undue prejudice of clear tactical disadvantage to any party4. The state of the PTO proceedings5. Efficient use of commission resources

In Certain Blu-Ray Disc Players, consideration of those factors led the Administrative Law Judge (ALJ) to deny the motion for stay pending reexamination before the PTO.

The Certain Blu-Ray Disc Players decision

In Certain Blu-Ray Disc Players, several respondents to an ITC investigation brought a motion to stay the proceedings. The respondents argued in favor of the stay because the patent-in-suit held by ITC complainant Walker Digital was under reexamination before the PTO.

The PTO’s reexamination of Walker Digital’s patent began shortly after Walker Digital brought suit for patent infringement in federal district court. The PTO’s initial ruling on reexamination rejected all of the claims of Walker Digital’s patent. That ruling “all but guaranteed” stay of the district court action. Walker Digital then filed its action in the ITC.

In their motion for a stay, the respondents claimed Walker Digital’s ITC action was an attempt to leverage the high expense of defending an ITC action into a settlement. The respondents argued that, given the pending PTO reexamination, the stay was appropriate because the ITC investigation had hardly begun. Respondents also argued that the remaining term on Walker Digital’s patent was long enough to allow the PTO reexamination to go ahead before the ITC investigation continued, and that Walker Digital could be compensated through monetary relief at the district court for the time of the stay.

Opposing the stay, Walker Digital first alleged that the ITC lacked the power to grant a stay of an ITC investigation. Alternatively, Walker Digital argued that the five factors weigh against granting a stay. In particular, Walker Digital argued that the stay would prejudice it because of the amount of time it would take to resolve the PTO reexamination, taking up the remaining life of the patent.

Walker Digital also argued that no relief existed to compensate Walker Digital for delay in resolving the investigation. ITC’s Investigative Staff also opposed the motion for a stay. The ITC Staff also focused on the length of time that would likely be required to resolve the PTO proceedings.

The ALJ in Certain Blu-Ray Disc Players concluded that the ITC does have the power to grant stays. The ALJ said that whether or not stay of a pending ITC investigation should occur requires consideration of the five factors discussed above. Considering each of these factors, the ALJ concluded that the factors weighed against issuing a stay. In particular, the high degree of uncertainty regarding the outcome of the PTO reexamination and the possibility of a significant length of time before those proceedings concluded both weighed heavily against granting a stay.

Of particular interest, the ALJ dismissed the respondents’ argument that Walker Digital could be compensated through monetary relief for the time of the stay. The ALJ said that the ITC has explicitly held that no weight should be given to the availability of alternative remedies in federal district court.

The ALJ also said that the alternative remedies available in federal district court are “in addition to and not instead of” the remedies available in the ITC. In fact, the ALJ said Walker Digital would be prejudiced by a stay because, unlike in some district court proceedings (through monetary relief), there would be no way for Walker Digital to recoup ongoing infringement loss in the ITC during the stay’s pendency.

Conclusion

The ITC’s growing popularity as a forum for resolution of patent infringement appears to rest as much on its availability as a viable source of dispute resolution during a pending PTO reexamination as it does on the speed of its decisions. As the recent decision in Certain Blu-Ray Disc Players seems to show, when a patent holder can establish that consideration of the key factors weighs against a stay, the ITC action likely will proceed regardless of what is happening at the PTO.